AT&T Q1: wireless profit margins fall but 1.2M connections added, with 684K in connected cars
Ina Fried / Re/code :
Context & Ripple Effects
AT&T's Q1 print shows where its subscriber growth actually lives: of 1.2M new wireless connections, 684K were connected cars — machines, not people, now supply most of the net adds. The trade-off shows up immediately in the margin line, which fell as low-revenue automotive lines diluted the mix.
That pattern was no one-off: by Q2 the company reported 2.1M additions driven mostly by connected cars and tablets, confirming that device categories beyond phones had become the volume engine. The question hanging over the story is whether cheap connections can ever rebuild profitability — a question the best-ever 50% wireless margin two years later, ahead of the Time Warner takeover would eventually answer yes.
First-order effects
- AT&T books 1.2M wireless net adds while posting falling wireless profit margins — headline subscriber momentum bought with lower-yielding connected-car lines.
Second-order effects
- Verizon, fresh off adding 1.3M wireless customers of its own, faces pressure to chase the same embedded-device volume or concede the connection-count metric to AT&T; automakers emerge as a de facto customer-acquisition channel for both carriers.
Third-order effects
- If machine connections keep outgrowing phone lines, carrier economics shift from per-subscriber pricing to wholesale-scale embedded deals — forcing AT&T toward adjacencies like content and media (the eventual Time Warner direction) to restore margin rather than relying on connection growth alone.
The trend: Wireless subscriber growth is migrating from phones to embedded machines like connected cars, pushing carriers to find margin outside connectivity.